Job performance rankings don’t have to kill cooperation

July 2, 2019

Faculty Director, Center for Positive Organizations, Wayne Baker, shows how your company can avoid the pitfalls.

Companies sometimes find it useful to rank employee performance on specific metrics, such as sales figures. Such rankings are easy to compile, clear, and objective. Everyone in the organization knows exactly how well they’re doing and whether they’re meeting expectations.

There’s a downside, however: Cooperation among employees tends to drop dramatically when they’re being ranked against each other.

New research by Michigan Ross Professor Wayne Baker and Cassandra R. Chambers of Bocconi University suggests a way to avoid this problem: If your company ranks how employees perform, make sure it also recognizes their positive contributions to the organization. The researchers found that simple step can help to counteract the negative effects of a ranking system.

The finding that employee ranking systems can reduce cooperation did not come as a surprise. “If my cooperation with you might push you ahead in the rankings, and you get the benefit and I don’t, it puts me in a really difficult situation,” Baker said. “I’ve got conflicting incentives. I want to cooperate, help you, and help the organization, but also I want to do well myself.”

Therefore, the researchers focused on whether it’s possible to counteract those negative tendencies. They conducted a study that tracked cooperation among participants in a large-scale simulation. When performance ranking information was provided to the participants, cooperation plummeted. But when information about how participants had helped each other was provided along with the rankings, cooperation rose again.

“What this really shows is that you need more information to judge a person’s performance,” Baker said. “It’s not simply the sales numbers. You don’t have to get rid of performance rankings, but you do need to add something else.”

Baker offered some suggestions for how your company might do this:

Recognizing and rewarding particularly helpful or above-and-beyond efforts of team members.

Introducing performance snapshots, which record everyone’s participation and contributions at the conclusion of a project.

“We hope this research compels people to start thinking about other ways that we can measure contributions. It could be the extent to which employees collaborate or their availability to answer questions,” Baker said. “Take a hard look at your performance management system, especially if you rank employees, and really evaluate the positive and negative effects of it.”

Baker is the Faculty Director for CPO and Robert P. Thome Professor of Business; Professor of Management and Organizations; Professor of Sociology.